For most small businesses, other than those in either the retail or tourism sectors, Christmas can really test the cash flow. Not only do you have extra spending on parties, presents and food but for at least two weeks during late December your business will shut down completely meaning little to no revenue.
And the real kicker is that it usually doesn’t start to pick up until February or March the following year. On top of that you’ll still be paying your staff, paying your rent and other bills like electricity and water.
So what can you do to lessen the pain? Here are some tips from the MJJ Accountants team to help manage your cash flow over the festive season:
1. Close up shop and head to the beach
There is no point in keeping your doors open and incurring costs if you aren’t busy over the festive period. Either maintain a skeleton staff or shut down completely. This will save your business on running costs and keep your staffs’ annual leave balances in check.
2. Invoice well before the Christmas break
Make sure you invoice for all the work done well before the Christmas shutdown. Don’t delay sending invoices until the new year! Considering offering a seasonal discount of 5% to customers who pay before Christmas.
3. Avoid big-ticket purchases
Now is NOT the time to take advantage of the $20K small business asset write off. Avoid buying large items of plant and equipment until cash flow picks up in the new year.
4. Collect your cash and go go go!
Try and collect the money you are owed before Christmas. With many businesses in the same boat as yours they will equally by cash flow tight in January and February. So chase your debts before the Christmas shutdown.
5. Don’t raid the tax and super piggy bank
Don’t forget there is super guarantee payment due by 28 January AND a BAS (with GST and PAYGW payment) due in February. Make sure you set aside adequate funds to cover these payments, and don’t dip into these! The ATO does not make a friendly creditor!